Treasury Committee launches inquiry into Credit Searches in conjunction with MSE

SmallBear44

Like one of the earlier posts, I applied for a loan from Sainsbury's Bank, having been a customer with both savings accounts and a credit card for several years. The rate offered was 6.9% but when they came back with their offer it was at 7.9%. Not much difference admittedly but as I had no debt (apart from a mortgage) had not been overdrawn for years, I queried it. They passed me on to the Halifax underwriting department (who provide the banking for Sainsburys) to investigate this and they too could not understand why I had not been offered the lower rate. As a result, I got my loan from the Halifax (at a slightly higher rate admittedly!) and closed my Sainsbury's Bank accounts and credit card. I can only assume that they were not earning enough money from me so I voted with my feet!

teddyco

Maybe the rules need to be changed so 'seeking' credit is not viewed on one's credit report?

I don't want governments and big business knowing my personal business, and neither should any of us.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty. Thomas Jefferson

samshocker

About three years ago, I applied for a low rate MBNA platinum card. I was telephoned by MBNA to be told I was successful, and an agreement was posted for me to signed in order for the Card to be issued. It all seemed very straight forward.

I was sent two copies of a lengthy agreement, one for me to keep and one to be returned asap to MBNA. I was disgusted that hidden in the depths of the small print was the APR, which was around 14% higher than I had applied for. I phoned MBNA to complain, they tried to pressure me to sign up and return it by stating that it ws still an excellent deal 'given my situation'

I never did sign it or return it. Instead I felt misled and suprised by the lack of clarity around the actual rate I had 'qualified' for. Had I have signed it and returned it, I would have already been committing myself to a substantial balance transfer at a rate that was worse than the current provider at the time.

MBNA felt vindicated as it was written in their terms and conditions that circumstances may not allow you to ge the rate. But it wasn't clear, or in plain english and worst of all, not clear from the application stage.

jinglespringles

bennosdelight wrote: »

Some banks and Building Societies do something called a 'soft score' on a loan which means that you find out what rate you are being offered without actually having the impact on your credit scoring.

I know that Nationwide do this and think that some of the other smaller people do aswell but i'm not sure about the big players like A&L, HBOS etc
:beer:

I do approve of all this being looked into however this 'Soft Score' doesnt always work, for example

I have just applied for a loan with N/W as i have banked with them for 21 yrs. i explained what i needed loan for, I got a 'Soft Score' of there advertised rate 7.7%. However when they applied i got turned down, even the lady who was helping me could not understand why!

Regards
Jingles

ROSSDR

I was 21 years old when I managed to put down an £1800 deposit on my first flat, this saved me a couple of hundred quid as I therefore didn't have to pay for the indemnity fee. This indemnity fee was to cover the cost of an insurance policy for the bank which would make up the difference of monies owed to the bank in the event that the flat was re-posessed and sold for less than I owed on it. The bank would never loose any money in the worst case scenario.
When I was 29 I sold that flat and bought a house having never missed mortgage or loan payment.
When I was 31 I was made redundant and rather than let my unemployment insurance policies kick in I took a job for £12k a year less that I was previously earning (a big part in this decision was the fact that the PPI policy that I had taken out on a loan weeks before being made redundant advised that they wouldn't pay out). Subsequently I landed in arrears with my mortgage and the loan which amounted to 3-4 months at it's peak. This matter was also being made worse by spiraling bank charges at that time.
Here I am 5 years later (Mortgage arrears crucify you for 6 years remember!) and I am still being punished for a bad year. Currently my debt level (excluding mortgage) stands about the price of a family saloon. In an ideal world I would be able to get a loan to pay this all off and have one payment of about £250 / month (Instead of the £700 I am currently paying) but can I get a loan for that amount and not at a huge rate, can I heck. The vast majority of my debt is to the Bank Of Scotland who were actually a decent bank until the Halifax got involved with their "Computer Says No" approach to customer relations. I was "fortunate" enough to reclaim some of the afore mentioned bank charges from B.O.S. and since then their computer has said "Absolutely Not" as If I had actually robbed them with a swag bag and tights over my head.
In short, 5 years later and I cant get a loan from a bank where the majority of it is owned by me (The taxpayer) to pay off money that I already owe them which would leave me with over £400 a month to put back into an economy that has been brought to it's knee's by these bankers who think that I am a risk to them!!!!!!!
I'm sure there are rogues out there who do swindle loads of money from the banks but I am not one of them, and its about time that the government started to look at financial legislation with a view to protecting the working man from the banks as it all currently seems weighted in the banks favour.

And dont get me started on how much I have lost in the housing market!!!!!!!!

DebtMagnet

Had a mortgage advisor do 4 credit searches in the space of a week without my knowledge. I only found out when I applied for a mortgage independently and was flatly refused. Checked my credit file and saw the searches. Even though I had not asked for, or authorised them, I was told by several providers that there was no way I would get offered anything competitive while those 4 searches were there and the likelihood was that I’d be refused if I applied again, which would in turn harm my score even further, a vicious circle.

Although that’s an extreme case and there was an incompetent advisor to blame, the result would have been exactly the same had I ‘shopped around’ for 4 mortgages/loans/credit cards to get the best prices.

We are encouraged to shop around for the best price on insurance, utility’s, phones, food etc, and we can do this to our hearts content without any fear of it affecting anything in any negative way financially (quite the opposite actually), so why do banks and credit providers still have this power to practically destroy our ‘credit score’ for nothing more than trying to find the best deal?

The whole credit scoring world is shrouded in mystery and we are not allowed to know what each credit provider is looking for to get their ‘typical rate’, so the only way we can try to get it is to apply, and the fact that this then hinders you if you get offered a poor deal and want to try elsewhere is appalling and needs to be changed ASAP.

I have a number of other examples should anyone want them.

Regards,
DM

never-in-doubt

DebtMagnet wrote: »

Had a mortgage advisor do 4 credit searches in the space of a week without my knowledge. I only found out when I applied for a mortgage independently and was flatly refused. Checked my credit file and saw the searches. Even though I had not asked for, or authorised them, I was told by several providers that there was no way I would get offered anything competitive while those 4 searches were there and the likelihood was that I’d be refused if I applied again, which would in turn harm my score even further, a vicious circle. DM

The scenario you paint above would not generate an auto decline - it is acceptable to have 6 searches in 6 months or 10 per year. If you're saying you were told because of 4 searches (wouldn't matter if they were done in a day or over 6 months, they count the same) that you were refused a mortgage then i'd have queried it - it is wrong!

Mortgages are also scored totally independent to variable credit thus this low amount of searches would have little, if any impact. To put it in perspective, I had around 80 searches when I last got my mortgage - admittedly it was a self cert and I paid 30% deposit but still, it wasn't even brought up (although it should have been, I had excrutiating circumstances in that I was the victim of ID theft!)....

DebtMagnet

never-in-doubt wrote: »

The scenario you paint above would not generate an auto decline - it is acceptable to have 6 searches in 6 months or 10 per year. If you're saying you were told because of 4 searches (wouldn't matter if they were done in a day or over 6 months, they count the same) that you were refused a mortgage then i'd have queried it - it is wrong!

Mortgages are also scored totally independent to variable credit thus this low amount of searches would have little, if any impact. To put it in perspective, I had around 80 searches when I last got my mortgage - admittedly it was a self cert and I paid 30% deposit but still, it wasn't even brought up (although it should have been, I had excrutiating circumstances in that I was the victim of ID theft!)....

Thanks never-in-doubt that is interesting to know. The incident I was referring to was over 2 years ago so not sure if that makes a difference to the rules? Besides I was told it did effect my credit score and that I would be unlikely to get much as a result by a number of different providers, so made my decision on a mortgage based on that info (i.e. I went with one who'd already 'searched' my file, in effect reducing my choice to 4 providers rather than the whole of market). As it was people from sales departments who said this I took it as being correct in good faith, as they didn't want to even bother going through the process with me of trying to get me on board?

I don't know enough about it so trusted people who should on paper know more than me, so if anything it still shows how this subject can lead to people being easily confused and getting things wrong due to the lack of transparancy with the whole system. It may have been wrong, but I didn't know any better.

If what your saying applied at the time then I'm even more annoyed than I was then, as I'm stuck with a mortgage product that I knew wasn't the best at the time but was scared to try anyone else as I wanted to apply for some 0% credit cards and didn't want to make (what I was told was) a bad situation even worse. In the end I waited 6 months before appliying for anything and it looks like there may not have been a need for that either?

The point still stands that had I been shopping round for the best APR on a loan that I'd have been punished for doing that?!

never-in-doubt

DebtMagnet wrote: »

Thanks never-in-doubt that is interesting to know. The incident I was referring to was over 2 years ago so not sure if that makes a difference to the rules?

No changes to 'rules' mate - they are not rules as such, they tend to call it 'industry standard' which is their version of saying 'old boys techniques'

So the processes were the same 5 years ago as they are today - its always the norm that 6 searches in 6 months is fine.

DebtMagnet wrote: »

Besides I was told it did effect my credit score and that I would be unlikely to get much as a result by a number of different providers,

That is true had they done various searches but a MiP (mortgage in principle) should only be leaving an internal footprint i.e. unrecorded enquiry, meaning other lenders do not see it (only you do)! Its not like you could get 5 mortgages so they [STRIKE]do not[/STRIKE] should not be performing credit searches.

To learn about the types of searches have a read of my handy guide here: Credit Reference Agencies

DebtMagnet wrote: »

so made my decision on a mortgage based on that info (i.e. I went with one who'd already 'searched' my file, in effect reducing my choice to 4 providers rather than the whole of market). As it was people from sales departments who said this I took it as being correct in good faith, as they didn't want to even bother going through the process with me of trying to get me on board?

I'd consider complaining to them using the basis of knowledge learned and the fact you feel you were mis-sold a product which may have offered them a more generous commission and as such you'd like to formally request the sale and retrospective processes are audited to establish authenticity within set guidance (to check they complied and did not mis-sell you the wrong product for financial gain!)....

DebtMagnet wrote: »

I don't know enough about it so trusted people who should on paper know more than me, so if anything it still shows how this subject can lead to people being easily confused and getting things wrong due to the lack of transparancy with the whole system. It may have been wrong, but I didn't know any better.

You're right there - some lenders/agents are nightmares..... consider revenge - see advice above

DebtMagnet wrote: »

If what your saying applied at the time then I'm even more annoyed than I was then, as I'm stuck with a mortgage product that I knew wasn't the best at the time but was scared to try anyone else as I wanted to apply for some 0% credit cards and didn't want to make (what I was told was) a bad situation even worse. In the end I waited 6 months before appliying for anything and it looks like there may not have been a need for that either?

What i'm saying is, unfortunately, true and did apply at the time as nothing has changed in that respect. Industry Standard/Practice (what nonsense) has been the same for many years, i.e. they do what they want and sod us - the consumer !!

DebtMagnet wrote: »

The point still stands that had I been shopping round for the best APR on a loan that I'd have been punished for doing that?!

Granted, accept this point and agree wholeheartedly.

Good Luck whatever you decide, feel free to PM or post away if you need specific advice or help..... :beer:

lamaar75

I applied for a Credit card with Marbles, it quoted their APR as 14.9% APR. I wasn't moving any money and only needed it as safety for an online transaction. Anyway, I was successful and advised that card would be sent in the post. When it arrived, the APR was 19.9%. I phoned then to ask why and was told that hardly no-one gets the 14.9% but they have to put that on their website as it is possible. I think it is disgraceful that you can be mislead like this.